May 2008 Archives

A Gartner presentation yesterday highlighted the changing role of the CIO from merely providing infrastructure to support the business, to suggesting ways the business can grow and transform itself by exploiting technology.

Mayank Prakash, CIO of Sage, said that CIOs had the best vantage point to make business decisions, since IT itself is pervasive across all other departments such as marketing, finance and sales.

He said that CIOs regularly head up change management programmes, which given their project management experience in installing IT systems, makes them the perfect agent to execute change in addition to suggesting ways in which a business can grow.

However, not all businesses will be receptive to IT leading innovation, and if CIOs regularly encounter resistance, they should set a time limit on their tenure at the company.

I wrote about globalisation being the common thread throughout the conference in my last post and enabling mobile working for dispersed workforces is a key part of this.

Surprisingly though, businesses seem to have an inherent mistrust of employees who are not at their desk, even though they might get more work done.

The challenge for the CIOs /IT managers, who are now being required to deliver business innovation, is to convince the business that traditional desk based working isn’t in the company’s best interest.

But how do they do that?

Well, the advice seems to be to start a small pilot project for a defined group of workers and to make sure there are business measurements in place to prove the value of mobile working over being chained to the desk.

As a very crude example, let’s take the IT support desk.

If a support technician can save two hours a day commuting and this results in him/her answering nine more calls a day or providing an extended hours service, that’s a business benefit, which is much harder for the company to refute than "mobile working" as a concept is.

IT managers need to determine their own specific business metrics for measuring the value of mobile IT. This requires a rudimentary understanding of the business strategy and questioning why, if mobile working isn’t on the agenda, explaining why it should be.

“In the short term this will give the Yahoo executives a sense of short-term relief, seeing off the bid without having to enter into a forced relationship with another bidder that would only have been less-bad rather than a good option for the company.”

“What does this mean for Microsoft now? There is some loss of face but it would have been a much greater loss if Microsoft had paid over the odds for Yahoo…Microsoft needs to move on quickly rather than entering any period of mourning over what might have been.”

“For me, one of the most important implications is in the Asian markets. Yahoo would have increased the presence of Microsoft in China and other parts of the rapidly emerging internet markets in Asia. China is the number one Internet user-base globally, ahead of the US in terms of numbers, although not in sheer dollar terms - at least not yet. Microsoft will need to make a number of moves to bolster its operations in these markets. This cannot just be through an increase in the size and scale of existing Microsoft operations in its target countries. Asian acquisitions need to play an urgent role in the new Asian strategy for Microsoft, and China, Japan, and Korea would be fruitful places for the head shoppers at Microsoft.”

If Microsoft had won the Yahoo deal, it would have automatically gained market share in the lucrative online advertising market. No bad thing considering that Microsoft estimates the online search and advertising market will be worth an estimated $80 billion by 2010.

But Microsoft has now withdrawn its offer completely. It has placed pressure on Yahoo to prove to its shareholders that it can raise its share price on its own.

And the benchmark has been set. Yahoo said Microsoft had undervalued its stock and asked for $37 a share - $6 above Microsoft’s original offer, which was a 62 per cent premium above the closing price of Yahoo on Jan 31 2008.

Microsoft took its offer up to $33, but Yahoo didn’t budge on $37.

By refusing to take Microsoft’s offer on the basis that it undervalues the company, Yahoo has indirectly admitted that it is not performing as well as it could be, since its current share price stands at $24.37.

Given that Yahoo’s stock dropped 15 per cent this Monday on the announcement of Microsoft walking away, it will have to pull some fairly innovative products out its quite lacklustre bag of online offerings, at a time when economic conditions aren’t exactly rosy, to reach the jump to $37.

And again, if Yahoo fails to deliver a $37 share price, Microsoft could re-enter the arena with a lower bid and still take control.

Like I said, whichever way this still plays out, it's a win-win for Microsoft.

SAP reported double-digit revenue growth for the first quarter of 2008, with healthy contributions from all three 'pillars' of its business - its core enterprise applications business, its mid-market portfolio and its business user solutions group.

But the vendor acknowledged that its new Software-as-a-Service (SaaS) offering, Business ByDesign, has not met early expectations and will take 12-18 months longer than planned to meet its 2010 goals of 10,000 customers and $1bn in revenues.